Timeframe Question: I Need More Information, Timeframes are Relative

Beginner Questions
1

While reading around on oscillators, I happen to come across this set of advice: “look for a currency pair that displays a pronounced and lengthy bullish trend.”

This kind of stuff is starting to make me mad however. Listen, what even is a “Trend”? A trend on the 1 day? A trend on the 1 hour? A trend on the 5-minute? A trend on the 1 week? What counts as a trend? Does price have to be falling for atleast a week for a trend to count as a “Trend”? Arent there mini trends inside a trend for smaller timeframes?

Obviously all of those are rhetorical questions purely asked out of frustration. My actual question is this:

When looking for a trend. What are the rules surrounding it? Which timeframe should we use to actually get the main trend?

Thoughts?

1 Like
2

Hey Zhadow…
I can help you think about this question.

First off, let me ask you this question.
Why are you asking this question in the first place?

I’ll help you.
You are wanting to trade, right? Apparently you are coming from the perspective of wanting to get in on a trend. I mean, that’s why you are trying to figure this trend stuff in the first place. Therefore, if you had a good idea about what constitutes a trend, then that would make your trading a little bit more easier. I get it.

Let’s step back a little. This is the thing. Everybody knows what a trend is. Even you. How about this. The weather. It can be unpredictable, but then again, it does trend. We all know that the weather men can’t always get it right, but a lot of times they do. It does trend. We will go through hot times, cold times, rainy times, dry times, snowy times, etc…The weather trends. And…it’s unpredictable. You know this.

Humans trend. I’m sure you’ve heard that humans are creatures of habit. Well, that follows a trend. Like, haven’t you ever done something over and over again until you’ve gotten tired of it? I used to get a breakfast sandwich every morning before work (wasn’t a good thing…but I can at least see that it was a season of doing something consistently). And many people behind the counter got to know me by name, during those times. So, in respects to humans, being the human behaviorist expert that I am, you can almost predict what a human will end up doing. Like how they will react to something specifically. Hopefully you know what I’m talking about.

That’s nice. Look. I have something written down. It goes like this. “Something stays constant until it changes.” What that really is saying is that something is trending until it changes. Think about that.

Now. Let’s talk about trading. I like how you articulated the fact that there can be trends inside of trends. So you are at least are aware of that. And you are aware of the different time frames.

In our trading, we first need to determine what time frame are we trading in. You’ve probably heard that you can be a scalper (being in a trade for such a short time period). Then when you zoom out a little bigger you can be a day trader (being in a trade before the end of the day ends). That could be some hours worth, right? Then there’s the swing trader. They (like me) can be in trades for a couple days to a week or two. You know, round about. Basically, those will be looking at end of day prices. Then out a little bigger will be those who are position traders. They hold out a little much larger. Like weeks to months out. They let it ride. Then last but not least is the investors. That’s kind of like the ‘buy and hold’ strategy. Mostly stocks.

Ok. So. There are some classifications for ya. On the broad side of things, but at least it puts some perspective on trading. Therefore, I should ask. What kind of trader, between those few types, are you?

  • Scalper
  • Day trader
  • Swing trader
  • Position trader
  • Investor

Chances are you’re not the investor, or you wouldn’t be asking these questions, right?

But, my point is, you need to have a good idea of where you’re at. And look…you need to go in so much further also. I would be asking these questions to you.

  • How long are you willing to let your trades run?
  • What’s the minimum amount of time that you absolutely won’t touch a trade?
  • What is going to tell you when you should be getting out of a trade? An indicator? Or a time frame?

These are some questions you need to reconcile first. See, all of this stuff should revolve around our trading. And then, once that is addressed, then you should delve into the trend stuff.

Look. When it comes to trends, there are a million ways to determine that. A lot of traders use indicators for that. For instance, a moving average. If it’s above a certain average (like the 200 ma), then it’s a bull trend. Likewise below that line a bear trend. I remember using fractals one time. All that is, is looking more at price action’s highs and lows.

The point is, there are a lot of different methods of finding out what the trend is. And guess what? Everybody can all be right…at the same time! Cause it all depends on what perspective you are coming from.

Therefore, you need to first know how you are going to trade. If you have some answers to those questions above, then you should have some kind of idea how you want to trade. And then, dive in a little deeper, and find out how you want to determine what the trend is. Chances are you won’t be too wrong about it.

Some traders say you don’t even need any indicators to know what the trend is. All you have to do is step back away from the screen…take a quick glance…from the left to the right…is it going up, or down? That would be your trend, right? And technically you won’t be wrong about that.

Everybody does know what a trend is. But it would be good for you to choose the best way that you think it is. Everybody will have a different method. Over the last few years I went through many different ones.

You also have to remember this. Our trading doesn’t (shouldn’t) solely rely upon whether we got in the trend or not. There are many other factors involved. How about…money management, risk management, wins vs losses, risk to reward ratio. Etc…

But, I think the most important factor in trading is time. Moreso than what a trend is. If you stay in a trade long enough, chances are very good that you will end up in profit, eventually. There is a guy in here that simply won’t lose because he won’t exit until he’s in profit. How about that huh? Do you think he’s concerned about what the trend is? Nope. He doesn’t care whatsoever. But he makes money anyway.

Sorry that this might be a lengthy post. I hope I gave you some things to think about.

Talk to me.
Is this a bunch of nonsense? Or not.

Mike

3 Likes
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Hey Mike. Thanks so much for the response.

I do understand what you’re trying to say, to answer the questions asked:

  1. I currently do day trading.I started out as a scalper, realized I didnt enjoy (or wasnt good enough) at a few second to minute trades and moved farther down where I could think about my trades for more time (im still in DEMO).
    I only like having my trades go intraday. Rather not hold over night.

  2. Im not sure what you mean about not touching a trade? Minimum from like…when I start from the day I would say about 25-30 minutes. I usually am getting everything set up and just start looking at the charts so. I dont usually get into positions that quickly.

  3. For my exits/entries. I usually dont have any indicator to tell me when to get out, I either set a profit taking level or trail it. I use S/R lines to of course put profits and move my stops but I dont really trade in a way where, I exit the trade when I see the price saying its going to go down, but instead whenever it hits my profit level.

  4. I use the 30-minute to find trades, 4-hour to confirm trends, and 5-minute to get good entry.

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Awesome replay! So detail; thanks mate! I wanted to answer but I see, you covered already the while idea!

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Hey Z…
Ok. Very good. I have some idea of where you’re coming from. But, without going into strategy details, I think this should be the main point.

  • You need to find something that works. And the best thing, would be to be able to write that method down, so that it’s clear and repeatable.

This way you can do the same thing over and over again, and in the long run, come out over break even. Doesn’t that make sense? See, the market just does not want to be that predictive. That’s why it likes to go back and forth so much. So, the best way that we can go about it is to find a pattern or something that we see, all the time.

I like to call that our approach to the market. Everybody’s is different. Everybody’s eyes, minds, see different things. And it’s best to go with what we prefer. This way we can get better at it as time goes by. Just like anything, if we like it, it’s that that we will master.

Anyway Z, if I were you, I would try to find out what works. Write it down.

  • What will tell you when you should get in.
  • What will tell you when you should get out. Both for profit, and for loss.
  • Duplicate this process, and see if you end up breaking even. Cause I believe that should be the starting point. Which is very good. You build from there.

In order to continually play this game, I believe this is the best way to go about it. It’s called the system.

So, let’s see. You look at the 4-hour charts for the trends. Ok. So, sometimes there are trends, and sometimes there are not. Then, what brings you in is when you see one, right? Then what? You say you are looking at S/R lines. Ok. You have them drawn on your chart. This leads me to believe that you believe in them. Nothing wrong with that. Then go with it. These will be your take profit levels and stop loss levels.

Well, then, all you need now is direction, right? Cause, you should know by now that these S/R levels are just places where things happen. They can get broken, retrace back to it, then continue on with the trend. OR, that’s where a turn around can happen. Like a change in trend. Right? And that’s why I think you should visit the trend direction question first. Then proceed with the chart analysis (those lines on it).

In any case, all this stuff should be hashed out in your system. You look at this first…then this next…then you know your take profit place…where your stop outs should be…you should already know how much you will risk of you account (position sizing)…well then, you make the order. And you also have the option of making it a market order, or an entry limit order. I think it’s best to decide that for yourself, and not let the market make that decision for you. Cause man, the market can be fooling.

You want a repeatable method. You know, like a templet.

Why?

So that you can measure the results. This will help you immensely in finding out what works. Think about it. If you do the same things over and over, that will make it much easier to see what’s wrong, and what’s right about your system. Know what I mean?

Alright.
Those are some of my thoughts.
Let’s keep talking about this.

Mike

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For me, trend on daily chart is more accurate than 30 minute chart or lower…you can check it by your self.